Japan hopes to leave farm talks out of bilateral dialogue with U.S.- sources

TOKYO, March 9 (Reuters) - Japan plans to leave agriculture out of its first economic dialogue with the U.S. next month, sources say, hoping to prevent thorny topics like liberalisation of its heavily protected farm industry from blocking other negotiations.

Tokyo will propose an agenda for its dialogue with the U.S. in coming days, which will include a wide range of issues such as how Japan can provide technical assistance for U.S. railway projects and increase imports of U.S. shale gas to Japan, according to government sources with knowledge of the matter.

Policymakers aim to focus the debate on ways to assist U.S. efforts in boosting infrastructure investment, an area where an agreement may be easier reached than other contentious issues like trade, the sources say.

“We’ll go with areas where a deal my be easier, such as infrastructure projects,” a government official said on condition of anonymity as he was not authorised to speak to the media. “Other issues may take more time.”

Many Japanese policymakers say the Bank of Japan and the Federal Reserve won’t directly participate in the dialogue, to avoid any impression that governments are seeking to guide independent central bank monetary policy.

U.S. President Donald Trump and Japanese Prime Minister Shinzo Abe agreed last month to launch a bilateral economic dialogue to discuss issues such as macroeconomic policies, trade and infrastructure investment.

“What’s important is to create a win-win situation for both sides. This is not something where one side wins and the other loses,” Shunsuke Takei, parliament vice minister at Japan’s foreign ministry, told Reuters in an interview, but did not comment on specific areas of negotiations.

Taro Aso, Japan’s finance minister and deputy prime minister, and Vice President Mike Pence, who is expected to visit Japan next month, will lead the bilateral talks.

Trump has complained about the U.S. trade deficit with Japan and accused Tokyo of using its “money supply” to weaken the yen and give exporters an unfair advantage.

While he avoided harsh rhetoric during a summit with Abe last month, there is uncertainty on what demands Washington may make at the bilateral economic dialogue.

Trump administration trade adviser Peter Navarro on Monday called out Japan for its non-tariff trade barriers and said negotiations to use U.S. leverage as the world’s largest market were needed to boost U.S. exports. (Additional reporting by Tetsushi Kajimoto, Kaori Kaneko, Minami Funakoshi and Linda Sieg; Editing by Sam Holmes)